Unholy Green Alliance

Beware of activists and businesses agreeing on solutions to climate change.

When the United Nations' International Panel on Climate Change issued its report on renewable energy in May, it released only a summary. The IPCC's spin-doctors presented this as the take-home message for journalists: "Close to 80 percent of the world's energy supply could be met by renewables by mid-century if backed by the right enabling public policies."

Last month the IPCC released the full report, with the data behind this startlingly optimistic claim. It is based solely on the most optimistic of 164 modeling scenarios that researchers investigated. And this single scenario stems from a single study that was traced back to a report by the environmental organization Greenpeace. The author of that report—a Greenpeace staff member—was one of the IPCC lead authors. The claim rests on the assumption of a large reduction in global energy use. Given the number of people climbing out of poverty in China and India, that is a deeply implausible scenario.

When the IPCC first made the claim, global-warming activists and renewable-energy companies cheered. "The report clearly demonstrates that renewable technologies could supply the world with more energy than it would ever need," said Steve Sawyer, secretary general of the Global Wind Energy Council.

This sort of reaction—activists and big energy companies uniting to applaud anything that suggests a need for increased subsidies to alternative energy—has been famously described as the so-called "bootleggers and Baptists" theory of politics. The phrase comes from the South, where many jurisdictions required stores to close on Sunday, thus preventing the sale of alcohol. The regulation was supported by religious groups for moral reasons and by bootleggers for market reasons. Politicians would adopt the Baptists' pious rhetoric, while quietly taking campaign contributions from the bootleggers.

Of course, today's climate-change "bootleggers" are not engaged in any illegal behavior. But it would be foolhardy to overlook the self-interest of energy companies, biofuel producers, insurance firms, lobbyists, and others in supporting "green" policies. Indeed, the "bootleggers and Baptists" theory helps to account for other developments in global warming policy over the past decade or so. For example, the Kyoto Protocol would have cost trillions of dollars but would have had a practically indiscernible effect on the rise in global temperature. Yet activists claimed that there was a moral obligation to cut carbon-dioxide emissions, and were cheered on by businesses that stood to gain.

Traditional energy giants like BP and Shell have championed their "green" credentials while standing to profit from selling oil or gas instead of environmentally "unfriendly" coal. Even U.S. electricity giant Duke Energy, a major coal consumer, won green kudos for promoting a U.S. cap-and-trade scheme. But the firm ended up opposing the draft legislation to create such a scheme, because it did not provide sufficient free carbon-emission permits for coal companies.

Dubious claims by faithful activists gave rise to the biofuels industry (with supporting lobbyists). As I have argued before, biofuel production likely increases atmospheric carbon, owing to the massive deforestation that it requires, while crop diversion increases food prices and contributes to global hunger. While environmentalists have started to acknowledge this, the industry received a lot of activist support when it began—and neither agribusiness nor green-energy producers have any interest in changing course now.

Obviously, private firms are motivated by self-interest, and that is not necessarily a bad thing. But too often, we hear commentators suggest that when Greenpeace and big business agree on something, it must be a sensible option. Business support for expensive policies such as the Kyoto Protocol—which would have done very little for climate change—indicates otherwise.

The climate-change "Baptists" provide the moral cover that politicians can use to sell regulation, along with scary stories that the media can use to attract readers or viewers. Businesses see opportunities for taxpayer-funded subsidies, and to pass on inevitable cost growth to consumers. Unfortunately, this convergence of interests can push us to focus on ineffective, expensive responses to climate change. Whenever opposite political forces attract, as activists and big business have in the case of global warming, there is a high risk that the public interest will be caught in the middle.